3956.08
Duties as to impaired or insolvent member insurer.

(1)
Subject to any conditions imposed as provided in division (A)(2) of this
section, the Ohio life and health insurance guaranty association may do either
of the following with respect to an impaired domestic member insurer:

(a)
Guarantee, assume, or reinsure, or cause
to be guaranteed, assumed, or reinsured, any or all of the policies or
contracts of the impaired insurer;

(b)
Provide the moneys, pledges, notes,
guarantees, or other means that are proper to effectuate division (A)(1)(a) of
this section and assure payment of the contractual obligations of the impaired
insurer pending action under division (A)(1)(a) of this section.

(2)
The association may impose
conditions upon any action it takes under division (A)(1) of this section if
all of the following apply:

(a)
The condition
does not impair the contractual obligations of the impaired insurer;

(1)
If a
member insurer is an impaired foreign or alien insurer that is not paying
claims timely, the association, subject to the conditions specified in division
(B)(2) of this section, shall do either of the following:

(a)
Take any of the actions specified in
division (A)(1) of this section, subject to the conditions specified in
division (A)(2) of this section;

(b)
Provide substitute benefits in lieu of
the contractual obligations of the impaired insurer solely for all of the
following:

(i)
Death benefits and health
claims in accordance with division (D) of this section;

(iv)
Cash withdrawals for policy
or contract owners who petition therefor under claims of emergency or hardship
in accordance with standards proposed by the association and approved by the
superintendent.

(2)
The association is subject to the
requirements of division (B)(1) of this section only if all of the following
apply to a foreign or alien insurer:

(a)
The
laws of its state of domicile provide that, until all payments of or on account
of the impaired insurer's contractual obligations by all guaranty associations,
along with all expenses and interest, at a rate not less than that allowed
under 96 Stat. 2478, 28
U.S.C. 1961, on all such payments and
expenses, shall have been repaid to the guaranty associations or a plan of
repayment by the impaired insurer shall have been approved by the guaranty
associations, all of the following apply:

(ii)
Neither the impaired insurer nor its
assets shall be returned to the control of its shareholders or private
management.

(iii)
The impaired
insurer shall not be permitted to solicit or accept new business or have any
suspended or revoked license restored.

(b)
The impaired insurer has been prohibited
from soliciting or accepting new business in this state, its license or
certificate of authority has been suspended or revoked in this state, and a
petition for rehabilitation or liquidation has been filed in a court of
competent jurisdiction in its state of domicile by the commissioner of
insurance of that state.

(C)
If a member insurer is an insolvent
insurer, the association shall do either of the following:

(1)
Guarantee, assume, or reinsure, or cause
to be guaranteed, assumed, or reinsured, the covered policies or contracts of
the insolvent insurer or assure payment of the contractual obligations of the
insolvent insurer, and provide the moneys, pledges, guarantees, or other means
that are reasonably necessary to discharge such duties;

(2)
With respect only to life and health
insurance policies, provide benefits and coverages in accordance with division
(D) of this section.

(D)
When proceeding under division (B)(1)(b)
or (C)(2) of this section, the association, with respect to life and health
insurance policies, shall do all of the following:

(1)
Assure payment of benefits for premiums
identical to the premiums and benefits, except for terms of conversion and
renewability, that would have been payable under the policies of the insurer,
for claims incurred within the following time limits:

(a)
With respect to group policies, not later
than the earlier of the next renewal date under such policies or contracts or
forty-five days, but in no event less than thirty days, after the date on which
the association becomes obligated with respect to such policies;

(b)
With respect to individual policies, not
later than the earlier of the next renewal date, if any, under such policies or
one year, but in no event less than thirty days, from the date on which the
association becomes obligated with respect to such policies;

(2)
Make diligent efforts to
provide all known insureds or group policyholders with respect to group
policies thirty days' notice of the termination of the benefits provided;

(3)
With respect to individual
policies, make available to each known insured, or owner if other than the
insured, and with respect to an individual formerly insured under a group
policy who is not eligible for replacement group coverage, make available
substitute coverage on an individual basis in accordance with the provisions of
division (D)(4) of this section, if such insureds had a right under law or the
terminated policy to convert coverage to individual coverage or to continue an
individual policy in force until a specified age or for a specified time,
during which the insurer had no right unilaterally to make changes in any
provision of the policy or had a right only to make changes in premium by
class.

(a)
In providing the substitute coverage
required under division (D)(3) of this section, the association may offer
either to reissue the terminated coverage or to issue an alternative policy.

(b)
Alternative or reissued
policies shall be offered without requiring evidence of insurability, and shall
not provide for any waiting period or exclusion that would not have applied
under the terminated policy.

(a)
Alternative policies adopted by the
association shall be subject to the approval of the superintendent. The
association may adopt alternative policies of various types for future issuance
without regard to any particular impairment or insolvency.

(b)
Alternative policies shall contain at
least the minimum statutory provisions required in this state and provide
benefits that are not unreasonable in relation to the premium charged. The
association shall set the premium in accordance with the table of rates which
it shall adopt. The premium shall reflect the amount of insurance to be
provided and the age and class of risk of each insured, but shall not reflect
any changes in the health of the insured after the original policy was last
underwritten.

(c)
Any alternative
policy issued by the association shall provide coverage of a type similar to
that of the policy issued by the impaired or insolvent insurer, as determined
by the association.

(6)
If the association elects to reissue terminated coverage at a premium rate
different from that charged under the terminated policy, the premium shall be
set by the association in accordance with the amount of insurance provided and
the age and class of risk, subject to approval of the superintendent or a court
of competent jurisdiction.

(7)
The
obligations of the association with respect to coverage under any policy of the
impaired or insolvent insurer or under any reissued or alternative policy shall
cease on the date the coverage or policy is replaced by another similar policy
by the policyholder, the insured, or the association.

(E)
When proceeding under divisions (B)(1)(b)
or (C) of this section with respect to any policy or contract carrying
guaranteed minimum interest rates, the association shall assure the payment or
crediting of a rate of interest consistent with division (B)(2)(c) of section
3956.04 of the Revised Code.

(F)
Nonpayment of premiums within
thirty-one days after the date required under the terms of any guaranteed,
assumed, alternative, or reissued policy or contract or substitute coverage
shall terminate the obligations of the association under the policy or coverage
under this chapter with respect to the policy or coverage, except with respect
to any claims incurred or any net cash surrender value that may be due in
accordance with this chapter.

(G)
Premiums due for coverage after entry of an order of liquidation of an
insolvent insurer shall belong to, and be payable at the direction of, the
association, and the association is liable for unearned premiums due to policy
or contract owners arising after the entry of the order.

(H)
In carrying out its duties under
divisions (B) and (C) of this section, the association, subject to approval by
the court, may do the following:

(1)
Impose
permanent policy or contract liens in connection with any guarantee,
assumption, or reinsurance agreement, if the association finds that the amounts
that can be assessed under this chapter are less than the amounts needed to
assure full and prompt performance of the association's duties under this
chapter, or that the economic or financial conditions as they affect member
insurers are sufficiently adverse to render the imposition of such permanent
policy or contract liens to be in the public interest;

(2)
Impose temporary moratoriums or liens on
payments of cash values and policy loans, or any other right to withdraw funds
held in conjunction with policies or contracts, in addition to any contractual
provisions for deferral of cash or policy loan value.

(I)
If the association fails to act as
provided in divisions (B)(1)(b), (C), and (D) of this section within a
reasonable time, the superintendent shall have the powers and duties of the
association under this chapter with respect to impaired or insolvent insurers.

(J)
The association may render
assistance and advice to the superintendent, upon his request, concerning any
insurer that is insolvent, impaired, or potentially impaired, or concerning the
rehabilitation, payment of claims, continuance of coverage, or the performance
of other contractual obligations of any impaired or insolvent insurer.

(K)
The association, and any
similar associations of other states, may appear or intervene before any court
in this state with jurisdiction over an impaired or insolvent insurer for which
the association is or may become obligated under this chapter, or over a third
party against whom the association or associations have or may have rights
through subrogation of the insurer's policy or contract holders. The right to
appear or intervene extends to all matters germane to the powers and duties of
the association, including, but not limited to, proposals for reinsuring,
modifying, or guaranteeing the covered policies or contracts of the impaired or
insolvent insurer and the determination of the covered policies or contracts
and contractual obligations. The association also has the right to appear or
intervene before a court in another state with jurisdiction over an impaired or
insolvent insurer for which the association is or may become obligated or with
jurisdiction over a third party against whom the association may have rights
through subrogation of the insurer's policy or contract holders.

(1)
Any
person receiving benefits under this chapter is deemed to have assigned the
rights under, and any causes of action relating to, the covered policy or
contract to the association to the extent of the benefits received as a result
of this chapter, whether the benefits are payments of or on account of
contractual obligations, continuation of coverage, or provision of substitute
or alternative coverages. The association may require an assignment to it of
such rights and causes of action by any payee, policy or contract holder,
beneficiary, insured, or annuitant as a condition precedent to the receipt of
any rights or benefits conferred by this chapter upon such person.

(2)
The subrogation rights of the association
under this division have the same priority against the assets of the impaired
or insolvent insurer as that possessed by the person entitled to receive
benefits under this chapter.

(3)
In addition to divisions (L)(1) and (2) of this section, the association has
all common law rights of subrogation and any other equitable or legal remedy
that would have been available to the impaired or insolvent insurer or holder
of a policy or contract with respect to the policy or contract.

(M)
If the aggregate liability of
the association with respect to any one life does not exceed one hundred
dollars, the association is not obligated to notify claimants possessing such
claims or make any payment thereto.

(N)
Except with respect to claims filed under
policies and contracts which are continued in force by the association past the
final date set by a court for filing claims in liquidation proceedings of an
insolvent insurer, the association is not liable to pay any claim filed with
the association after such date.

(1)
Enter into any such contracts
and take such actions as are necessary or proper in the judgment of the board
of directors to protect the interests of the association, or to carry out the
powers and duties of the association or the provisions and purposes of this
chapter;

(2)
Sue or be sued,
including taking any legal actions necessary or proper to recover any unpaid
assessments under section
3956.09 of the Revised Code and to
settle claims or potential claims against it;

(3)
Borrow money to effect the purposes of
this chapter. Any notes or other evidence of indebtedness of the association
not in default are legal investments for domestic insurers and may be carried
as admitted assets.

(4)
Employ or
retain such persons as are necessary to handle the financial transactions of
the association, and to perform such other functions as become necessary or
proper under this chapter;

(5)
Take such legal action as may be necessary to avoid payment of improper claims;

(6)
Exercise, for the purposes of
this chapter and to the extent approved by the superintendent, the powers of a
domestic life or health insurer, but in no case may the association issue
insurance policies or annuity contracts other than those issued to perform its
obligations under this chapter;

(7)
Join an organization of one or more other
state associations of similar purposes, to further the purposes and administer
the powers and duties of the association;

(8)
Enter into agreements with other state
associations of similar purposes to determine the residence of persons for
purposes of this chapter.